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Costs
UB ECON 305 Chapter 13 Boyes
17
Economics
Undergraduate 3
05/18/2014

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Term
Diminishing Marginal Returns
Definition
When firm increase output without being able to increase all resources- law of physics
Term
ATC Average Total Cost
Definition
Cost per unit of output total cost/Quantity of Output
Term
Marginal Cost
Definition
Is the change in cost caused by a change in output..= change in TC
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Change in Q output
Term
Marginal Product of labor
Definition
MC=W/MP---MArginal cost = wage/Marginal Price or the additiontional additional cost of a unit of labor = W
Term
Fixed Costs FC
Definition
Costs that must be applied whether or not a firm produces any output
Term
Variable Cost VC
Definition
The costs that rise and fall with production
Term
Total Cost
Definition
FC + VC
Term
The Law of diminishing Marginal returns
Definition
Relationship between Costs and output in the Short Run --- eventually the MR will fall
Term
Operating Leverage
Definition
The Ration of Fixed costs to Variable Costs
Term
Operating Period
Definition
Short run multipl short run on graph
Term
Planning Period
Definition
Long Run
Term
Long run Average TC
Definition
This is the average of all the short run Costs. in a Marita Sony
Term
Economies of Scale
Definition
When an output doubles and its cost per unit of output decreases
Term
Diseconomies of Scale
Definition
Size of firm is doubled and we have an output increase by less than double
NOT THE LEARNING CURVE
Term
Constant returns of Scale
Definition
Cost per unit of output is constant, as output rise all resources are variable.
Term
Large Scale not always best
Definition
Efficiency and and Specialization are limited by the sixe of the market
Term
Economies of Scope
Definition
When a firm has a product advantage from producing one more unit.
NO THE LEARNING CURVE
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